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Chemical battery storage, led by lithium, has advanced so far in terms of cost, capacity and technology that batteries are now positioned to accelerate the already exponential growth of solar.
“But what happens when the sun goes down?” This old saying now has a definitive answer: “Batteries take over.”
Throughout 2023 and 2024, lithium-based batteries have moved from being merely useful, and somewhat expensive, to being on the verge of affordability and widespread deployment. This transformation has been driven by significant cost reductions and increases in manufacturing and deployment volumes.
But before we get into the details, lets look at why batteries are such a useful technology.
Batteries are fast
Imagine batteries as spaceships or missiles, adjusting their trajectory with precise, rapid bursts of energy. In astronautics, this is known as a “reaction control system,” an essential technology since the days of the early Apollo missions. Similarly, batteries are able to deliver precise amounts of energy within milliseconds. This capability proved crucial when the world’s first large-scale battery installation prevented a blackout in Australia by responding more quickly than traditional power plants could.
With their microsecond response times, batteries provide ultra-precise power outputs that are critical in times of sudden demand. This rapid response allows batteries to act more quickly than the slower, more cumbersome responses of traditional fossil-fueled power plants. Recognizing the advantages of this rapid response, Australia was able to significantly shorten the reaction time required for power plants from 30 minutes to just 5 minutes.
Combined with grid inverters, batteries are helping the power grid to break free from the physical rotating masses that have traditionally provided stability during complex grid events.
The microsecond reaction time not only improves grid stability, but also allows battery developers to maximize revenue when electricity prices rise.
Batteries are distributed
Both large and small battery installations are making headlines. In 2018, Vermont used a mix of residential and grid-scale batteries to save ratepayers on utility-level demand charges, achieving $6.7 million in savings on a hot summer Tuesday. The following year, Sunrun earned the trust of the New England System Operator by integrating 5,000 residential solar and storage installations, marking some of the first virtual power plants in the United States.
Imagine if 300 million electric vehicles (EVs) in the United States, including cars, buses, trucks, and fleet vehicles, were all connected to the grid. Each with an average battery of 75 kWh, they would collectively offer about 22.5 TWh of capacity—enough to power the country for two days. Because vehicles tend to follow humans, they are often strategically placed to deliver electricity precisely where it is needed.
Perhaps, in the not-too-distant future, not plugging in your car will become a social offense, like recycling or turning off the lights when leaving a room.
Expanding this concept, imagine that every residential, commercial and industrial building, along with electrical substations, were equipped with substantial batteries. Together, they would form a vast network that would help balance the electrical grid. This network would seamlessly integrate mobile and fixed storage solutions to meet demand in a variety of locations, ensuring a reliable and responsive energy system.
Batteries generate creativity
What if, instead of relying solely on battery backups for our homes, we expanded the concept to include all kinds of household electronics? Battery backups designed for consumer light bulbs are becoming commonplace, especially for EXIT signs which, by law, must combine LED lighting with lithium batteries.
Consider the potential of “smart” appliances, not only capable of connecting to the Internet, but also designed to supply electricity to the home during peak demand. An induction cooker or heat pump consumes a lot of electricity, which can overload outdated wiring. To mitigate the necessary upgrades, Impulse Labs has integrated a 3 kWh battery into its induction hobs.
Integrating batteries into commercial buildings and high-demand appliances enables “peak shaving” – the maximum energy consumed by an appliance at a given time. This approach was one of the first economically viable uses of distributed batteries on the grid, helping to offset costly peaks in demand. Energy utilities invest heavily in standby power plants to manage these peaks, ensuring sufficient supply when collective demand peaks occur.
Similar needs drive the integration of batteries into electric vehicle chargers, which often require considerable power peaks. A recent innovation has been the incorporation of batteries into an electric vehicle truck stop to reduce the load on the grid and allow for faster and cheaper connections.
Imagine a landscape populated by big batteries, small batteries, electric vehicles, stoves, light bulbs and countless other devices, all delivering power exactly when it is needed and recharging when it is cheapest.
Batteries are getting bigger and cheaper
Like the solar industry, the battery sector has seen significant price declines, particularly following supply chain issues caused by the COVID pandemic. Recently, bids for fully installed battery systems in China have dropped to as low as $60/kWh.
Such a low supply price is pushing the boundaries of what was previously considered possible, raising questions about the future of battery costs and capabilities. For example, how much could the price of lithium-ion batteries go down? And what will energy storage adoption look like as prices fall to ever-smaller fractions of their current value?
By 2024, we expect more than 1 TWh of energy storage to be deployed globally for the first time. Driven by strong EV sales and widespread BESS deployment, demand for lithium-ion batteries continues to soar, suggesting the potential for a further five-fold doubling of capacity in the near future.
Although current estimates suggest we have deployed less than 5 TWh of capacity worldwide, the urgent need for transportation and energy systems to move away from fossil fuels may require several hundred TWh. Since the cost of battery cells falls by 20% to 30% for every doubling of their capacity, prices could fall to $10 to $20 per kWh.
When pv magazine asked energy modeler Dr. Jesse Jenkins about the price competitiveness of lithium-ion versus baseload power sources defined by their constant output, he clarified:
Neither price provides baseload, as that requires continuous discharge. If you mean what price allows for multi-day storage that allows wind and solar to displace firm capacity, then $1-10/kWh is what were looking at here. $20-30/kWh would eat that up.
Our “pale blue dot” is often compared to a spaceship exploring the vastness of the galaxy. Aboard this ship, eight billion crew members diligently manage a vast network of distributed transmission and storage. Imagine a ship in which batteries of all sizes, from those that power bedside lamps to those that fuel container ships, all work together like a vast power orchestra as we hurtle through the cosmos.
The untapped potential of energy storage
While it is conceivable that solar, wind, and energy storage alone could meet all of humanity’s global energy demand, we do not need to do so. However, technologies such as lithium-ion and sodium batteries offer fast, scalable storage solutions that can complement the capabilities of long-duration storage systems, such as those developed by Form Energy. Together with existing energy sources such as nuclear, hydro, and anticipated advances in geothermal technology, there is a clear path to cleaning up our electrical and energy systems.
However, the future of energy storage, like any technology, is fraught with uncertainty. We do not know what final form these batteries will take, their final cost, their longevity or the pace at which they will be deployed.
Our ability to predict technological advances and deployment scales is notoriously imperfect, as evidenced by historical underestimations of solar capacity growth. The chart above, initially created by Auke Hoekstra (founder and director of the NEON research program), highlights the International Energy Association’s consistent underestimation of the solar revolution since the early 2000s. This serves as a stark reminder of our forecasting limitations; as recently as 2022, deployment of over 400 GW of solar capacity far exceeded analyst predictions, and we are now looking ahead to our first terawatt year, with expectations of reaching 600 GW of global solar capacity by 2024.
Despite these challenges, there are reasons for optimism in the field of energy storage. This sector promises to be a dynamic and powerful complement to the already strong expansion of solar energy, creating a powerful technological feedback loop. |
